Fannie, Freddie Retain Higher-Priced Mortgage Limits
Mortgage giants Fannie Mae and Freddie Mac will continue to fund higher-priced mortgages at current limits at least through the middle of next year, federal regulators announced.The Federal Housing Finance Agency, which oversees Fannie and Freddie, was planning to lower limits by the end of the year in a move designed to decrease its role in the market and bring more private capital to the mortgage business. But Ed DeMarco, FHFA acting director, says: “We are not making a change there in the immediate term.”
In 2008, government-backed mortgage limits were increased from $417,000 to up to $729,750 in some high-cost areas. In 2011, limits were reduced to $625,500 in high-cost areas, but FHA’s limits remain at $729,750. The limits were scheduled to decrease at the end of this year.
The housing industry has been lobbying against any drop in the loan limits, concerned it could hamper the housing recovery.
The National Association of REALTORS®, along with other housing industry associations, recently wrote to Congress, urging the FHFA to delay reducing the loan limits.
“While high-cost loans make up a low percentage of all loans, it is simply a matter of equity for those living in high-cost markets where many millions of families live,” NAR wrote. “Without higher loan limits in these areas, many hard-working, middle-income families will be denied homeownership just because they happen to reside in an area of high home prices. Lowering loan limits also would … create confusion and uncertainty for potential borrowers and lenders, especially in the months leading up to any reduction. There is already turbulence enough in the regulatory environment for mortgage lending.”
DeMarco said that FHFA would provide at least a six-month warning of any changes to the limits in the future.